When it comes to managed IT services, pricing and packaging are two of the most important business decisions you can make—having far-reaching effects beyond your bottom line. In this fourth installment of the 7 Habits of Highly Successful IT Service Providers, you’ll learn why selling the value of your services is better than offering the lowest price.
At Navigate 2017, Continuum CEO Michael George outlined seven habits that the most profitable, growth-oriented MSPs in the industry all seem to have in common. Designed as actionable skills you can put to use immediately in your business, these seven habits of highly successful IT service providers are proven building blocks for success in a modern managed IT services business. Each of the seven posts in this special series explores one habit in greater detail.
Habit #4: Selling Value and Avoiding Competing on Price (Alone)
Virtually every IT Service Provider (ITSP) has at least one customer they regret winning because they undercut a competitor on price. The decisions made in the early stages of your relationship with a new customer sets the tone for all future activities and engagements, and if you’re competing on price alone, you’re setting yourself up for frustration and aggravation that will likely lead to you either losing or leaving that customer.
Because the market is so competitive, any customer worth chasing is being chased by more than just your organization. As such, MSPs need to be able to differentiate and set themselves apart from their competition through means other than pricing. Communicating that the value of your offering is greater than that of any other service provider is how to win strategic clients—pricing only plays a minor role in that conversation or proposal.
Before discussing the value of your service offering, you’ll need to qualify why your prospect could use your services, and that means identifying the pain points their business is suffering from. Your service offering is a solution because it resolves or prevents an issue your client is having; the entire value of your services is derived from this need.
Therefore, establishing value becomes a process of:
- Qualifying and identifying the pain points your prospect has (whether they know it or not).
- Detailing how your services address those pain points, and how they can make your prospects business better.
- Explaining how your solution can do this better than any of your competitors.
At this point in the process, pricing has little to no place in your proposal—the goal is to present the indisputable worth of your solution and the consequences of not using it. If done correctly, the price becomes a much smaller determining factor, as the value your solution provides your prospect is far greater than the cost of not having it. And, if you can win on value against your competitors, a conversation about price will go far smoother because it won’t be about undercutting them, it will be about why your service is a better fit for the prospect.
There’s no denying that hearing a second opinion can make all the difference in a buying decision; it’s why most eCommerce websites place heavy emphasis on customer reviews. As an ITSP, your previous work should speak for you in the same way; using your existing customers’ comments, testimonials and endorsements to help you sell to new prospects can mean the difference between a prospect that’s on the fence and one that is ready to close. Seek out these statements from your client base, noting the ones who would be most inclined to supply glowing reviews based on excellent service.
A third-party reference can make all the difference, and you should insist that new prospects speak to one of your references as well. Through their voice, you can demonstrate the value of the long-term relationships you’ve developed with existing customers. Your focus should be on helping your prospects eliminate pain points, rather than solely concentrating on reducing the price of their IT services—and both you and your references can help explain that.
One way to bring your clients and prospects together is to hold small events, such as “lunch-and-learns,” which allow your prospects and clients to network while keeping the topics focused and allow you to demonstrate your expertise as an IT services provider. This facetime with valuable existing clients can close deals faster, because the transformative power of your solution is at once proven and supported by an outside party.
Remember: value is all how your prospect perceives you can be of worth to their business. Prove that your IT services are indispensable to the growth and success of their business, and they’ll be ready to make a decision—knowing your price is well-justified by the value you provide.
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